Dung Quat Refinery anticipates losses after crude oil import tariff
VietNamNet Bridge - Managers of the Binh Son Refining & Petrochemical JSC (BSR) have expressed their concern that Dung Quat Refinery may take a loss because of the crude oil import tariff of 5 percent.


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BSR’s chair Le Xuan Huyen said the company has asked the government to adjust the import tariff applied on Azeri crude oil imported from Azerbaijan and other crude oil products.

At present, the tariff on crude oil imports from 172 countries and territories offering MFN (most favored nation) status to Vietnam is zero percent, as stipulated in Dispatch 8678 of the General Department of Customs (GDC).

At present, the tariff on crude oil imports from 172 countries and territories offering MFN (most favored nation) status to Vietnam is zero percent, as stipulated in Dispatch 8678 of the General Department of Customs (GDC).

The crude oil output from Bach Ho (White Tiger) field and domestic production continue to decline, which has forced Dung Quat to use more imports. 

Meanwhile, the Azeri oil sourced from Azerbaijan now bears the import tariff of five percent. The high tax rate will affect the supply of crude oil and increase the production cost .

In 2017-2018, the oil refinery had to import 10 percent of crude oil from Azerbaijan and pay import tax a year (over VND300 billion).

It has halted importing crude oil from Azerbaijan, and sought new oil supply sources to avoid a loss.

Also according to Huyen, in 2010-2018, Dung Quat tried 11 crude oil import products and found that Azeri was the only material suited to the oil refinery. Azeri oil can replace oil from the White Tiger oil field. 

If Dung Quat stops importing Azeri oil and uses alternative material which is less compatible, Dung Quat will have to cut production capacity, which will lead to reduction in revenue and tax to be paid to the State.

While Dung Quat bears an import tariff of 5 percent, the Nghi Son Oil Refinery can enjoy zero percent tariff, valid for the entire project life. This means that the tax policies are uneven for two oil refineries, which puts Dung Quat at a disadvantage.

In the first two months of 2019, Dung Quat operated at 108 percent of designed capacity, churning out 1.1 million tons of finished products of different kinds, which brought turnover of VND13.654 trillion.

Dung Quat, with the current capacity of 6.5 million tons of crude oil a year, or 148,000 barrels per day, is a key investment project important for national security. BSR is now expanding the refinery to increase the capacity of 8.5 million per annum in a project capitalized at $1.8 billion.

In the latest news, the Ministry of Natural Resources and the Environment has approved a report on the possible impact on the environment. 


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Mai Chi

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